Having been a ‘long time in the making’, the fleet industry now awaits the general election to see whether theif continuing Brexit deadlock over Brexit means thatwill find new company car tax rates and the required legislation are adopted into law.

Having been announced in the summer, the new benefit-in-kind (BIK) rates were expected to be approved in the Autumn Budget, ready to come into force from April 2020.

However, continuing uncertainty surrounding the state of Brexit has meant that plans have been put on hold during the general election. Matthew Walters, Hhead of Cconsultancy and Ccustomer Ddata Sservices at LeasePlan UK is hopeful that despite the delay, the new rates will be implemented “regardless of the election result”, but is keeping an eye on how the election may impact these rates in order to ensure that their customers are well informed and prepared for any developments.

Earlier this year, the Fleet Industry responded to a series of questions about whether vehicle tax changes would be required once the new vehicle emissions testing regime, - the Worldwide harmonised Light vehicle Test Procedure (WLTP), – is adopted for tax purposes from April 2020.

The impact of the WLTP on fleets is already significant, as manufacturers suggest that more than 50% of cars they currently make will see an increase from NEDC-correlated emissions values to WLTP of between 10% and 20%. As a result, company car drivers and fleet operators looking to choose a new car from April 2020 will face increased tax liability in comparison with an identical model previously based on NED- correlated values.

Walters explained: “Since the introduction of WLTP, there has been growing concern among fleet operators around the impact this would have on company car tax rates.”

Furthermore, the HM Treasury has unveiled two new BIK tables for company car drivers, one for company cars registered before April 6th 2020, and one for those driving a company car after the same date. These tables have revealed that for cars first registered from April 6th 2020 most company car tax rates were due to be reduced by two percentage points, with a new zero percentage rate for pure electric vehicles, creating increased interest as to whether these are a viable option for drivers and Fleets.

According to Deloitte, this level of interest is understandable, as company car drivers who opt for EVs will cut employee total cost of ownership bills by 95% due to the new 0% company car tax rate on zero emission vehicles,- a 16% decrease from the current rate.  

As a result, the newly formed Government will have to pass legislation in order for these new rates to take effect. Caroline Sandall, chairman of fleet representative body ACFO, said: “We would hope that at the very least company car benefit-in-kind tax rates from 2020/21 to 2022/23 will be adopted in legislation immediately after the forthcoming election.”

The new Government is expected to announce a Budget once it takes office after the gGeneral election, and the fleet industry will be hoping that the new rates will then become law.